Helping Provide Financial Security through a People-focused Approach to Portfolio Management

Yesim Tokat-Acikel, Managing Director, Portfolio Management, Principal Asset Management

Yesim Tokat-Acikel, Managing Director, Portfolio Management, Principal Asset Management

Portfolio managers are often thought of as people focused on the numbers. While we are numbersfocused, I have found that focusing on people and the goals of clients are keys to success. For many clients, the pursuit of happiness and the well-being of loved ones are important life goals. As they seek to achieve these goals, financial security is top-of-mind. The team at Principal Asset ManagementSM has been working alongside clients, working with their advisors, to manage financial assets for over two decades. While much has evolved over time—including client needs, technology, and investment opportunities—what has remained is our focus on supporting financial security through diverse and custom approaches.

The Importance of Diversification

While financial security can seem like a singular goal, achieving it in the ways that matter most to clients takes a team committed to a flexible, diversified approach; asset allocation strategies that generate portfolios with stocks, bonds, and other asset classes have served investors well over the last several decades; these pre-packaged asset allocation portfolios provide capital growth commensurate with the risk an investor is willing to take.

"Asset allocation strategies that generate portfolios with stocks, bonds, and other asset classes have served investors well over the last several decades"

The intentional and strategic process of diversifying portfolios keeps the customer in mind. Portfolio management teams with expertise in varied asset classes work behind the scenes to make decisions on the strategic allocations to key asset classes and tactical management of the portfolios over the market cycle. We think diversification is a critical component of long-term success for an investor. Each of the five risk-based asset allocation portfolios we run at Principal® employs an active asset allocation approach, investing in various asset classes and underlying equity or bond portfolio managers encompassing more than 4,000 to 11,000 individual securities. These portfolios are continuously monitored in response to changing economic and market conditions. This diverse approach, employing a team of experts, allows clients to live their lives knowing that we are focused on their financial goals.

The Emergence of Customization

We are continuously looking for innovative ways and forward-thinking approaches as we manage asset allocation strategies and leverage our portfolio management experience for new and better client solutions. Technology has enabled us to provide more customized model portfolio solutions for our clients alongside their advisors. While buying a pre-packaged asset allocation portfolio based on risk tolerance can be a great solution for many investors, we understand that clients are unique with diverse priorities. For example, some investors are more tax-sensitive, while others feel strongly that low-cost passive ETFs have unique advantages. Model portfolios allow us to work with clients to help design properly diversified portfolios while accommodating their unique situations.

What’s next?

 The desire for customization is a significant trend in the industry. As clients increasingly view financial security as inclusive of their entire financial situation, many advisors have moved away from making excess returns part of their value proposition. This makes today an exciting and rewarding time to work in portfolio management. The effective use of models allows advisors to focus on holistic financial planning with clients and meet this important business growth driver. Meanwhile, professional portfolio management teams with decades of experience in managing diversified portfolios are working diligently to offer portfolio management services to advisors.

While customization is an ever-growing trend and exciting opportunity, as portfolio managers, we must never lose sight of the key role we play in navigating ever-changing macro environments. In a world that is increasingly complex, portfolio managers are well suited to manage the intricacies of our global environment and the factors that influence return opportunities. For busy individuals, it is hard to keep track of these developments and their implications on financial security. The goal of financial advisors and portfolio management teams, such as mine, is to help take some of this responsibility off their shoulders. It is our job to monitor these developments and make appropriate portfolio allocations. Just as we have always done, as our clients’ needs and investment opportunities evolve, we continue to innovate and work with them to help them achieve their financial goals. By taking a people-first approach, not only are we adding value to advisorclient relationships, but we are also collectively striving for better outcomes for clients in their journey to financial security.

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Financial Security

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